“Shark Tank” star and real estate mogul Barbara Corcoran issued a stern warning about the future of the commercial real estate market as buyers and sellers head into the summer months.
Appearing this week on FOX Business’ “The Claman Countdown,” Corcoran said the commercial real estate market It is directed towards the “problem.”
Despite the large number of commercial vacancies in cities, people are not going to take advantage of them for “a penny on the dollar” because there is not enough “trust” to buy these buildings right now.
“Nobody really believes this is going to change the situation,” he said bluntly. “People are staying home. Our best office buildings in midtown Manhattan are 50% occupied, and in most major or minor cities, we have a 20% vacancy rate. Nobody wants to take that risk “.
Corcoran’s statistics reflect a broader national trend.
According to data obtained by NBC from commercial real estate company JLL, office real estate vacancies in the US it reached levels of up to 20% in the fourth quarter of 2022, the highest level since the Great Recession of 2008-2009.
Corcoran believes regional and small banks will be the ones to suffer, as many businesses can’t pay or are behind on mortgage payments to their lenders.
“I don’t see that changing,” he said. “I think it will be a bloodbath before it gets better.”
When it comes to residential real estate, Corcoran said the market is “recovering” but has an inventory problem. He also noted that “there is no relationship” between the commercial and residential markets.
“Sellers don’t want to move out of their apartment or their house because they don’t want to take on higher interest rates,” Corcoran explained. “People who go out to buy realize that they are overbuilding. They are having a hard time getting the house. And right now, what everyone fears is high interest rates. But the moment those rates interest rates go down, all hell breaks loose and prices are going to skyrocket.
Corcoran said he wouldn’t be surprised if home prices rose 20% again if interest rates fell two points.
Realtor.com compared Corcoran’s mentality to the “chicken and egg” conundrum caused by the lack of available housing.
“Many sellers report that they are worried about finding another home, which may cause some of them to put their plans to go public on hold,” said Realtor.com Chief Economist Danielle Hale. Well-informed person. “But this reduces the total number of options for buyers in the market.”
Last month, the Federal Reserve high interest rates another 0.25 points, placing the range between 5.00% and 5.25%.